Bright Health Group will terminate its Medicare Advantage operations in Florida, continuing to contract its insurance business.
Insurtech announced in October that it would exit the Affordable Care Act exchange business to focus solely on its Medicare Advantage operations in Florida and California next year, as well as its supplier affiliates. grant NeueHealth. The company will now only operate Medicare Advantage plans in California for 2023, Chief Financial Officer Cathy Smith said during its third-quarter earnings call on Wednesday.
“We had a sizable shift in our cost structure as we moved out of the ACA and MA insurance businesses in all states except California,” Smith said. . “We’re doing a good job of restructuring our business expenses year over year, which should bring those costs down pretty quickly.”
Insurtech took several actions during the quarter to stabilize its finances.
The company sold $175 million of Series B stock to support its struggling cash situation. It fully withdrew from a $350 million revolving line of credit and committed $46 million of this cash to support provider affiliate participation in the REACH payment model of the Qualified Care Organization. federal responsibility. It incurs a $79 million premium shortfall provision, which means it will eventually lose this amount on a contract it sold. Smith said the company will spend $61 million next quarter from this fee.
It hopes to recoup another $250 million after it has paid all claims made by its waning exchange businesses and Medicare Advantage over the next six to 18 months.
“We are working with state regulators as we close and serving the continued membership we have today. By the end of Q1 we will have completed 90% of the requirements,” CEO Mike Mikan said on the call. “We will be engaging with regulators on releasing that capital. It will be staged over time. We believe some states will be more proactive soon and some will continue for a while. “
The company also removed 99 positions from its headquarters in the Minneapolis area on Wednesday, according to the Minnesota Department of Employment and Economic Development. The Star Tribune The newspaper first reported on the layoffs. Bright Health Group declined to comment on whether it will lay off additional staff.
The company holds about $2.8 billion in cash and investments. Most of its funds are tied to insurance subsidiaries, from which state regulators must approve withdrawals.
In addition to these arms, the company holds $221 million in cash, up $138 million from the previous quarter. The reported unregulated assets of the company do not include $175 million in shares sold last month, Smith said. With that sale included, the company holds about $400 million in unregulated funds, she said.
“We have significantly strengthened our capital position and we are fully funded for profitability,” Smith said. The Company aims to achieve profitability on an adjusted earnings before interest, tax and depreciation basis by 2023.
Bright Health Group reported a net loss of $259.3 million for the quarter, an improvement over the same period of $37.3 million. Corporate quarterly revenue increased 51.3% to $1.6 billion. Bright Health Group counted 1.15 million members during the quarter, most of which were on the foreign exchange market. Insurtech counted 125,000 Medicare Advantage members across its entire business books.
Mikan said the company doesn’t think pulling out of the Florida Medicare Advantage market will result in a net drop in membership.
“The net number is the net profit,” he said. “Over the past few years, we have increased our total number of MA books in business by about 40%, a significant growth over the past few years. I would describe us as continuing to grow and share but have not been able to achieve the growth over the years. ”
Update: This article has been updated to include information from the Minnesota Department of Employment and Economic Development.
